E veryone who was ever involved in a process of buying or selling a home will tell you that the role of a title company is very important, but that they were unaware of this fact before they started the process of selling or buying. We all think that real estate agents and attorneys are the only ones who matter in this field, and the reason for this may be in their aggressive marketing campaigns and the fact that they have a lot of direct personal contact with the clients. However, there are other professions involved in an ordinary real estate transaction process, including home inspectors, appraisers, and several others, but title companies are the ones who do all the work and take the biggest load when it comes to sealing the deal and making the transfer successful.
The duties and responsibilities of title companies are multiple, which is the main reason for their importance. They play a role of a cohesive element, connecting a seller and a buyer but remaining constantly in a neutral position. Since they are impartial and unbiased, title companies have the trust of both parties and they, therefore, serve as honest custodians of money and valuable papers. Besides this role, they also record those papers in the county land record office, and this small role is also often overlooked and forgotten.
The job of a title company starts when they are hired by a seller to perform a title search on the property in question, and this means that the title company’s employees will go through all files and records that may have some information about the previous ownership of the property. If there are any other claims, and the seller is not the only titleholder, then this presents an encumbrance and can pause the progress of the transaction until the matter is successfully resolved.
Once the examination is complete, title company writes a document called a title abstract, which is basically a list of previous ownerships and serves as a proof of current claims on the property. After this document is issued, the seller usually buys a title insurance policy, which serves as a guarantee against any fraudulent ownership claims in the future. Title insurance is paid at the sellers expense, and the funds are deducted after the whole process is over. However, during the transaction, money is held in an escrow account managed by the title company, and some other fees and expenses are also deposited into this account.
Types of Title Insurance Policies
After the process of real estate transfer is over, the money from the escrow account is disbursed and it goes to pay all expenses that are needed to finish the settlement and sell/buy a house. The closing is the only moment where clients will probably meet the representatives of a title company, and once this is over, title company employees go back to the “shadows” and they do their work in silence and away from the public eye.